You're hiring your first employees, or a general contractor just asked for proof of coverage, and you've heard Texas doesn't require workers' compensation. For most private employers, that's true. Texas lets private employers choose. But governmental entities must carry it, companies working on government contracts must cover the employees on the project, and many private contracts demand it. If you choose not to carry it, you become a non-subscriber, with notices to post, filings to make and lawsuit exposure to plan for.
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When Texas Does Require Workers' Compensation
The Texas Department of Insurance says private employers can choose to carry workers' compensation, but it isn't required in most cases. The exceptions matter, especially for Dallas-Fort Worth businesses that bid public or commercial work:
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Governmental entities. Public schools, utilities, cities and counties must have workers' compensation coverage.
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Private companies on government projects. Employers that contract with government entities must provide coverage for the employees working on the project.
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Contracts that require it. Some contractors require their subcontractors and independent contractors to carry coverage. A general contractor, property manager or corporate client can make it a condition of the job.
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Industry rules. Some state licenses and transportation rules add their own coverage requirements, so check the rules for your trade.
In other words, the law may let you skip it while your contracts don't. Read the insurance clause in every contract before you decide. Our guide to Texas business insurance requirements covers the other coverages Texas law and contracts ask for.
Subscriber vs. Non-Subscriber: The Core Difference
Texas uses two labels for private employers:
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Subscriber. An employer that provides workers' compensation by buying a policy from a licensed insurance company, by being certified to self-insure, or by joining a certified self-insurance group.
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Non-subscriber. An employer that chooses not to provide Texas workers' compensation coverage. An employer that ends its policy becomes a non-subscriber on the date the policy ends.
Most Texas employers now sit on the subscriber side. In 2024, 24 percent of Texas employers were non-subscribers, the lowest share since 2016, according to the Texas Department of Insurance, Division of Workers' Compensation. Just 13 percent of Texas employees worked for a non-subscriber, the lowest share in a decade.
What Subscribers Get
A workers' compensation policy pays benefits to employees hurt or made ill by their jobs. That includes medical care, part of their lost income, and burial expenses and benefits for the family if an employee dies.
For the employer, the key benefit is legal protection. The Division of Workers' Compensation says coverage limits your liability if an employee sues, except in cases of gross negligence that result in a death. Claim disputes go through the Division's dispute resolution process instead of a lawsuit, and your insurance company pays your attorneys' fees and costs in those disputes. Insurers must also provide accident prevention services, such as safety surveys and training, at no added cost.
What Subscribers Must Do
Carrying a policy comes with its own paperwork:
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Post a notice of coverage at your workplace, using the Division's notice that matches how you're covered.
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Tell new hires in writing about your coverage and their right to reject it and keep their common law right to sue.
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Notify employees within 15 days if your coverage ends or changes.
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Report injuries on time. File the Employer's First Report of Injury or Illness with your insurance company within eight days after an employee misses more than one day of work, or immediately for a work-related disease or death.
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Don't charge employees for coverage. The Texas Department of Insurance says you can't, with exceptions for independent contractors and construction workers.
For coverage options and how a policy is priced, see our workers' compensation insurance page.
What Non-Subscribers Give Up
The Texas Department of Insurance says a non-subscriber loses the legal protection against most lawsuits. An injured employee can sue over a workplace injury or illness. If that happens, the employer can't argue in court that:
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the employee's own negligence caused the injury
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another employee's negligence caused the injury
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the injured employee knew about the danger and accepted it
The Division of Workers' Compensation adds that non-subscribers lose the protection of statutory limits on liability. A single serious injury can turn into a lawsuit without the caps that apply in the workers' compensation system. How that plays out depends on the facts of the case, so talk to an attorney before you decide.
What Non-Subscribers Must File and Post
Choosing not to carry coverage doesn't mean doing nothing. The Division of Workers' Compensation requires non-subscribers to:
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Post a notice of no coverage in English, Spanish and any other language your workers need, where employees can see it regularly
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Give new employees written notice that they aren't covered
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File a notice of no coverage with the Division between February 1 and April 30 each year, after hiring the first employee, and after ending a Texas workers' compensation policy
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Report injuries if you have five or more employees. Report work-related injuries with more than one day of lost time, work-related illnesses and deaths on the Division's non-covered employer report. Each report is due by the seventh day of the month after the death, the lost time began or you learned of the illness.
The Division's online tool, Employer E-File, lets employers and their agents file and manage these notices and injury reports from any device.
Why "Alternative Plans" Aren't Workers' Compensation
Some non-subscribers buy an injury benefit plan for employees and assume it works like workers' compensation. It doesn't. The Texas Department of Insurance says Texas law doesn't treat alternative policies, or coverage bought from unlicensed companies, as workers' compensation. That means:
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You keep the lawsuit exposure of a non-subscriber.
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The plan has dollar and time limits. If an injured employee's care costs more than the limit, you might have to pay the rest.
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Claims against an unlicensed company might not get paid if it fails.
If you want workers' compensation, buy it from a company licensed by the Texas Department of Insurance. You need at least one employee, who can be part-time. If you can't find a company that will sell you a policy, Texas has an insurer of last resort for employers in that position.
Self-Insurance: An Option for Large Employers
Large private employers can apply to self-insure, which means paying their own claims instead of buying a policy. The Division of Workers' Compensation says applicants generally must show at least $500,000 in unmodified workers' compensation premium, provide a security deposit, show enough financial strength or at least $10 million in national premium, and present a plan for handling claims. The application fee is $1,000. Similar businesses can also join a certified self-insurance group. Most small and midsize Dallas employers buy a policy instead.
Dallas-Fort Worth: What the Local Data Shows
The Division publishes non-subscriber notices on the Texas Open Data Portal. Notices filed from January 1 through September 30, 2026 show:
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8,206 notices statewide
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Houston: 751
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Dallas: 464, the second-highest count of any Texas city
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Fort Worth: 256
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Plano: 115
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Irving: 95
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Arlington and Frisco: 87 each
Timing is a local headache too. Of those 8,206 notices, 3,547, or about 43 percent, arrived in April, the last month of the filing window. If you're a non-subscriber, put February 1 on your calendar instead of April 30.
Common situations we see in Dallas-Fort Worth:
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Construction subcontractors. General contractors often require workers' compensation before you start, and a school district, city or county project requires it by law. See our contractors insurance page and contractor liability insurance cost guide.
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Restaurants and retail. Busy kitchens and stockrooms bring burn, slip and lifting risks, and high turnover makes the new-hire notice easy to miss. See restaurant insurance.
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Spanish-speaking crews. Non-subscribers must post notices in Spanish as well as English. We offer Spanish-language service, and our Spanish business insurance page explains coverage in Spanish.
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Proof for a client. A certificate of insurance shows a client that you have coverage. Our guide to what a certificate of insurance is explains what it can and can't do.
How to Decide: A Checklist for Texas Employers
Use these questions with your advisor and your attorney:
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Do any contracts, leases or bids require coverage? If yes, the decision is often made for you.
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Do you work on government projects? Coverage is required for employees on those projects.
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How risky is the work? Ladders, vehicles, machinery and heavy lifting raise the stakes of an uncovered injury.
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How many employees do you have? Five or more triggers the non-subscriber injury reports.
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Could you pay a lawsuit without statutory limits? Be honest about cash reserves.
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Can you keep up with the paperwork? Both sides have notices, deadlines and reports.
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How will it affect hiring? Coverage can matter to the workers you want to keep.
Texas has made coverage more affordable over time. The Division of Workers' Compensation reports that workers' compensation insurance rates have dropped 81 percent since 2003. Premiums are based on your payroll, the type of work and your claims history, so a quote is the only way to see your number. The Texas Legislature meets again in January 2027, so check for changes before your next renewal.
How Thumann Agency Helps Texas Employers
We've placed business insurance in Dallas since 1996. Your dedicated advisor explains the subscriber and non-subscriber trade-offs in plain terms, and as an independent broker with access to more than 80 carriers, we compare workers' compensation options for your payroll and job classes. Existing clients can get same-day certificates of insurance when a contract asks for proof, and we review your coverage every year at renewal. To see how other coverages fit around it, read how to customize your business insurance plan.
"Rona is very knowledgeable about her products. She was prompt to return emails and phone calls. She pursued me (in a good way) when she needed information in order to obtain her quotes. She was able to bring clarity to any questions that I had. She was quick to resolve problems. I am so glad I moved our business."
Tanie Vaughn
Talk to Us about your contracts and your crew, or Get a Quote.
Frequently Asked Questions About Texas Workers' Compensation
Do sole proprietors with no employees need workers' compensation?
Texas doesn't require it, and you generally need at least one employee to buy a policy. Some insurance companies will sell a policy covering the executive officers of a business with no other employees. If a client or general contractor requires coverage before you start a job, ask your advisor whether one of those options fits your business and the contract.
Can my employees turn down workers' compensation coverage?
Yes. When you have coverage, you must tell new hires in writing about it and about their right to reject it and keep their common law right of action in court. An employee who rejects coverage keeps the right to sue instead. Talk to an attorney about how to handle a rejection properly, since the paperwork and timing matter.
Can I buy workers' compensation if I hire independent contractors?
Yes. The Texas Department of Insurance says you can buy coverage if you employ contractors who don't have workers' compensation. Tell your advisor how many contractors you use and whether they carry their own coverage. Whether a worker is truly an independent contractor is a legal question, so ask an attorney, and tell your advisor how you use outside workers.
What happens if I cancel my policy in the middle of the year?
You become a non-subscriber on the date the policy ends. You must notify employees within 15 days of the change, file a notice of no coverage with the Division of Workers' Compensation and post the notice of no coverage in English and Spanish. Plan the timing with your advisor so you don't miss a contract requirement in the meantime.
Does workers' compensation pay for every workplace injury?
No. The Texas Department of Insurance says it won't pay if an employee intentionally caused the injury, was hurt while playing around or intoxicated, was injured during a voluntary off-duty social or sports event, or was hurt by someone for personal reasons. Injuries from floods and other acts of nature generally aren't covered unless the job adds extra exposure.
Need Help Choosing Between Subscriber and Non-Subscriber?
Tell us about your employees, payroll, type of work and any contract requirements. We'll show you what workers' compensation would look like for your business and what your obligations are either way. Get a Quote or Call Us at (972) 991-9100. You can also start with our workers' compensation insurance page.
Last Reviewed: November 2026
Author: Lauren Thumann Director of Marketing.
Sources: Texas Department of Insurance: Workers' Compensation, Texas Department of Insurance, Division of Workers' Compensation: Employer E-File, Texas Department of Insurance, Division of Workers' Compensation: Employer Frequently Asked Questions, Texas Department of Insurance, Division of Workers' Compensation: Workers' Compensation Insurance Coverage Verification, Texas Department of Insurance, Division of Workers' Compensation: 2024 Biennial Report Snapshot, Texas Open Data Portal: Workers' Compensation Non-Subscriber Employer Information
Disclaimer: This information is provided for general educational purposes only and is not legal, tax, or insurance advice, or a full description of any policy. Coverage terms, conditions, limits, and exclusions vary by carrier and by state, including Texas. Not all coverages or discounts are available in all states. Reviews and ratings are from verified customers and reflect their own opinions and experiences. For details about your specific needs, please contact Thumann Agency directly. Thumann Agency is licensed and operates under Texas Department of Insurance regulations. Workers' compensation participation and non-subscriber rules are set by Texas law and the Texas Department of Insurance, Division of Workers' Compensation, and can change. Whether to carry coverage, and how a lawsuit would play out, are legal questions to review with an attorney.